The CMS will allow cash-strapped Alabama to postpone its Medicaid privatization and restructuring demonstration.

The state's Republican governor, Robert Bentley, a physician, has been a proponent of the restructuring, citing potential savings for the program. The demonstration, which will use regional care organizations, was pushed back by a year to formally begin on April 1, 2017, and end on March 31, 2022.

Alabama will begin enrolling beneficiaries into managed care by Oct. 1, 2017. But first, the CMS will check that the state is ready to implement statewide managed care.

Iowa's Medicaid managed-care program has faced significant complaints from providers who say they're not getting paid since it was launched early last year. Republican Gov. Terry Branstad converted the state's traditional Medicaid program to a private managed-care model, arguing it would cut costs. Critics said implementation of the program was rushed.

Alabama's Section 1115 waiver provides up to $748 million over five years to move the state away from traditional fee-for-service payment. The state's GOP leaders have refused to expand Medicaid, which would cover an estimated 300,000 additional residents and bring about $1 billion a year in federal funding into the state.

—Virgil Dickson

SOUTH: Moody's downgrades Texas system's debt rating to speculative

Moody's dropped the debt rating of ETMC Regional Healthcare System to speculative grade, saying the hospital company needs to change its operating trajectory to avoid putting bond covenants at risk in early 2018.

Moody's downgraded ETMC five notches from Ba1, which is just below investment grade, to B3, a speculative rating indicating high risk. Moody's outlook on the system remained negative.

Based in Tyler, Texas, 11-hospital ETMC has been posting operating losses and posted a margin of negative 6.9% in its fiscal 2017 first quarter, ended Jan. 31. Moreover, ETMC is facing volume pressures from its cross-town rival, Trinity Mother Frances Health System, which was acquired in May by much bigger Christus Health. Christus, with more than 50 hospitals and long-term-care facilities, has the capital to expand services in the market, Moody's said.

Though it has divested some rural hospitals in recent years, East Texas still owns rural hospitals that are suffering from declining populations and economic troubles in the oil patch.

—Dave Barkholz

SOUTH: Virginia Republicans again reject Medicaid expansion

Republican lawmakers in Virginia rejected another bid to expand Medicaid, saying the cost of providing new health coverage to thousands of poor adults would cripple the state.

The House of Delegates voted against Medicaid expansion last week as lawmakers reconvened for a one-day session to consider Democratic Gov. Terry McAuliffe's amendments and vetoes.

While many of McAuliffe's proposed amendments were rejected, Republicans were unable to overturn any of the governor's vetoes. After attempts to overhaul the Affordable Care Act failed last month, McAuliffe renewed his long-standing push for Medicaid expansion and proposed a budget amendment that would give him the power to do so. The governor said Republicans had run out of reasons to block Medicaid expansion.

Thirty-one states have expanded their Medicaid programs under the ACA, including some with Republican governors. But Virginia Republicans have held firm against expansion. They said the state's current Medicaid program is already growing at an unsustainable rate and expanding it would be fiscally irresponsible, even with the federal government covering most of the expansion costs.

The California Assembly is considering legislation that would require insurance companies receive state approval before they can merge or acquire other health plans.

The bill passed the Assembly Health Committee last week and was introduced in February, shortly after federal judges blocked the marriages of Anthem-Cigna and Aetna-Humana.The competitive impact of health plan mergers and acquisitions are currently scrutinized by California Insurance Commissioner Dave Jones.

The bill would allow the state's Department of Managed Health Care to approve any mergers or acquisitions of health plans that operate in the state based on their competitive impact, in addition to the insurance commissioner signoff. Under existing law, the Department of Managed Health Care approves health plan mergers and acquisitions to ensure compliance with consumer protections and financial requirements.

The proposed law would require insurers to apply for a license as a new health plan as part of the merger approval process. The department would decide whether to approve that new license.

The department would also have to hold public hearings on proposed mergers; provide customers and patients with data on the deal's impact to cost, quality and access to care; and determine if the insurer is of “reputable and responsible character.”

—Maria Castellucci

MIDWEST: State AGs side with Planned Parenthood in Ohio abortion funding suit

Attorneys general from 16 states have joined Planned Parenthood in their fight to overturn an Ohio law that prevents healthcare providers that offer abortion services from participating in publicly funded health programs.

In an amicus brief filed last week, the attorneys general argued that the state law violates providers' constitutional rights because it pressures them not to provide abortion services by taking away funding for certain services.

Planned Parenthood of Greater Ohio sued the Ohio Department of Health in May 2016, claiming the law would limit patients' access to abortion services.

The law has been on hold for the last year after a U.S. District Court judge blocked its implementation due to Planned Parenthood's lawsuit. The state has appealed the decision.

The Ohio law proposes to remove funding for services related to screening for breast and cervical cancer, HIV and AIDS prevention, testing and treatment for sexual transmitted diseases and infant mortality prevention.

Since 2009, 15 other states have adopted laws to prohibit public funding against providers who perform abortions, according to the amicus brief.

“Healthcare providers should not have to choose between protecting a woman's right to reproductive healthcare and providing other vital public health services—yet that's exactly what the Ohio state law, and so many other regressive measures around the country, seek to do,” New York Attorney General Eric Schneiderman said.

—Maria Castellucci

MIDWEST: Ascension sells Wisconsin hospital to Marshfield Clinic

Marshfield (Wis.) Clinic Health System has agreed to buy Ascension's Ministry St. Joseph's Hospital in Marshfield allowing the giant physician group to gain a hospital without having to build one.

Marshfield's 800 physicians see the vast majority of patients at the 220-bed hospital. About 300 Marshfield physicians have privileges at St. Joseph's, said Marshfield spokesman John Gardner.

The multispecialty group was considering building a hospital in Marshfield that would have competed against St. Joseph's before the two sides agreed to a letter of intent announced a year ago, Marshfield Chief Financial Officer Gordon Edwards said in January. Terms of the deal were not disclosed.

Bernie Sherry, ministry market executive for Ascension Wisconsin, said Catholic-sponsored Ascension would continue to expand its services into other north-central Wisconsin communities.

—Dave Barkholz

NORTHEAST: Audit finds MassHealth made $93 million in improper payments

MassHealth, Massachusetts' Medicaid program, made about $93 million in improper payments for behavioral health services over five years.

An audit released last week and conducted by state auditor Suzanne Bump found that from July 2010 to June 2015, the state failed to bill the Massachusetts Behavioral Health Partnership, a managed-care organization that provides services to Medicaid patients. The report also recommended that MassHealth review about $100 million in claims.

The partnership serves more than 375,000 of MassHealth's 1.9 million beneficiaries. In total, MassHealth paid about $2.6 billion for members who are enrolled in the Massachusetts Behavioral Health Partnership.

The audit found billing mistakes due to improper coding and duplicative payments.

A MassHealth spokesperson disagreed with the audit, which the agency claims mistakenly includes items such as flu shots as behavioral health services covered by Massachusetts Behavioral Health Partnership because the patient is an enrollee.